The Franchise Owner's most trusted news source


Log In / Register | Dec 16, 2017

Eggstra! Subway Breaks Into Bkfast

QSR behemoth Subway Sandwiches, owned by privately held Doctor's Associates Inc, will begin national advertising of the new breakfast program next week. Official roll out is April 5, and franchisees in test markets speaking to BMM on condition of anonymity report strong customer response with initial sales building over time.

Breakfast daypart is about to wake up.

Breakfast has traditionally been a fragmented market, with the exception of McDonalds. The experience of MCD is likely to serve as a model for Subway, where founder Fred DeLuca has been a close observer of his competitor. While increasing unemployment has put a dent in MCD breakfast business, the early daypart normally accounts for about 25 percent of MCD food sales.

Many have tried and failed in the breakfast segment. Customers are notoriously impatient at breakfast, and are creatures of habit. As a result, even the best-designed breakfast programs can fail if poorly executed: customers will go elsewhere and stay there. The need for speed means that franchisees will have to ramp up labor staffing, while the nature of customer loyalty means that breakfast sales grow slowly.

Of course, the huge Subway advertising budget gives an opportunity for instant top-of-mind presence. Perception of Subway as a "healthy" and "fresh" alternative may also contrast favorably to a MCD menu which hasn't changed much in some while.

Much analyst attention has focused on the impact on breakfast stalwarts MCD and SBUX. But a bigger impact could well be on Quiznos.

Since Quizno's has no comparable program, the Subway outlets will be at a competitive advantage and that will likely carry over from increased purchasing power to increased ability to secure real estate from landlords who might have a MCD (or BKC) and SBUX in their mall but will only have a single sandwich concept.

For privately-held Dunkin' Brands, the Subway move poses a challenge. Having inked a deal with SBUX subsidiary Seattle's Best Coffee, the Subway franchisees may take market share in Dunkin's core daypart.

The only sure winner is the consumer, who will benefit from increased choice and downward pressure on price points as the chains battle for supremacy.

No votes yet

Reply

CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.